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Can UDC chief solve Coliseum quandary?

The Metropolitan Transit Authority has agreed to use Vincent Tese, chairman of the New York State Urban Development Corp., as mediator in its talks with the city and developer Boston Properties for the Coliseum site. The question now is can Tese make everyone happy.

Can Tese act like a modern-day King Solomon and split the baby, leaving the convention area to be rented out by the MTA and the office tower to be reconstructed by Boston Properties, giving each side a project to activate.

Sources say it has already been determined that the central building systems that serve both structures can be severed at a cost of around $6 million. At least one proposer for renting the Coliseum has said its plan includes this cost.

Boston Properties would have to agree, however, to fit its latest two-phased proposal, or some other scenario, around the current convention building. In fact, sources tell REW, the developer has already made inquiries as to the feasibility of these systems being severed and certain retail components being dropped from its current proposal so as not to tie up both buildings.

Boston Properties Chairman Mortimer Zuckerman said, through a spokesperson, that until the parties approve the two-phase plan he would not be looking at specific placement for the buildings. Once a plan was approved, however, he would look at the site and see how the buildings could fit.

"It sounds like the kind of proposal that we would be willing to discuss," said John Cunningham, a spokesperson for the MTA. "We have been looking for something different proposal. There are a lot of questions that would have to be answered but it sounds like the kind of proposal we would be willing to discuss."

What Zuckerman has on the table currently is a two-phase plan involving the construction of two separate towers, the first of which could house the law firm of Weil, Gotshal & Manges but also tie up the front of the Coliseum convention site for retail. The land for this 25-story building would be purchased with a payment of $62 million to the city.

The second 600-foot tall, 48-story structure would be built in the future at a price and time to be determined with $3 million payments being made for the next two years.

Meanwhile, the MTA is eager to rent out the Coliseum for the interim to any one of eight proposers whose focus is on the convention center area and garage and not the office tower. This would bring in real income for the space on an immediate basis.

In a tersely worded lener to Mayor David N. Dinkins, dated Aug. 20, MTA Chairman Peter E. Stangl, noted "the reality must be acknowledged that a common ground with the developer simply may not be achievable."

These latest developments, however, show some repositioning that may be able to move the talks forward. Stangl previously pushed the Dinkins administration to issue a notice to Boston Properties with a closing date of Nov. 15, because he stated. "not. as [Deputy Mayor] Barry [Sullivan] claims, to default Boston Properties, but to stimulate serious negotiations." The administration instead called for Tese to come in as a party with extensive economic development experience who can do what is best for New York City.

Any closing notice needs to give the developers 90 days to close on the property. Under its current contract, Boston Properties would pay the $338 million purchase price or default on the $33.86 million letter of credit. Any 90-day notice sent at this point would go beyond that original Nov. 15 deadline.

As of last week, Tese had not scheduled any meetings but the end of the summer holiday season may signal a new beginning for the Coliseum site.
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Title Annotation:New York State Urban Development Corp. chairman Vincent Tese appointed to mediate negotiations with Boston Properties for development of Coliseum site
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Sep 1, 1993
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